It’s a question you’ve probably heard over and over: When will the current bull market end? Depending on how you do the math, the stock market has risen for almost a decade, with a quick pause last December. Back in elementary school, you learned “what goes up must go down.” Doesn’t the market *have* to go down at some point? Or, another way to put the question: Don’t bull markets die of old age?
My friends at Acorns / Grow asked me to look into this recently. You can read my full story here.
It’s a timely question — by some measures, the current bull market became the longest ever.
History suggests that economic cycles are real — there are expansions and contractions, followed by expansions and contractions. Good times don’t last forever. The roaring 20s were followed by The Depression. The dot-com and housing bubbles were followed by the Great Recession. Stocks generally follow these broader trends, so those long bull markets eventually turned into bear markets. Bull markets do end.
When they do, what “kills” them? Is it old age, or something else?
HCWE & Co. identified 14 bull markets since 1925. They had a mean lifetime of 55 months, but their life expectancy was not impacted by age. An HCWE report cited by the Wall Street Journal found that two-year-old bulls had, on average, 46 more months to live…while five-year-old-and-older bulls had 44 months left.
“Empirically, the life expectancy of bull markets is roughly age independent,” the report says
In truth, a dataset of nine or 14 bull markets is a truly small sample size; it’s hard to draw a conclusion from either study, other than there’s certainly a lack of evidence that age has anything to do with when a bull market ends.
So what does kill bull markets? High interest rates, uncertainty…there are plenty of theories. Click over to Grow for the rest of the story.